Background and credit checks

I am serving on a committee to amend our by-laws that have been in use for the past 30 years.

Some persons on the Board of Director's would like to add the requirement where a prospective buyer of property would have to have a background and credit check before a current member could sell a lot.

In the past some members were unable to maintain their lots or pay the dues and assessments. The Board believes that the requirement would eliminate or at least reduce the instances of non-payment.

The process of checking on a potential new member would take from 14 to 30 days to complete. Meanwhile the lot owner could not sell their lot. What it comes down to is the Board will tell its current members who than can sell their property to.

Your comments on this would be appreciated.

Thanks,
Wayne

Tried the search function, but it does not work.

What Mark said. Besides, life is unpredictable - even if you get someone with "perfect credit," how do you know there won't be a job loss, major medical illness or something else that effs up his/her bankroll?

Concentrate on educating new owners about the importance of paying assessments in full in on time instead. Make sure everyone receives a copy of the annual budget with regular income/expense report updates and encourage input on how money can be saved.

HOA's are not to have Social Security numbers of their members. They don't fall into those creditors that information is required.

Plus it's like giving a credit and background check to people who simply say they like a house how much is it? A potential buyer is NOT a HOA member. The HOA doesn't need to be involved in the sales/rental of property.

First, as with others, I also think the idea is beyond the authority of the Association.

Second, if you are considering approving potential buyers or renters (which are effectively purchase and rental restrictions), you are placing it in the wrong document. It needs to be in the CC&Rs, otherwise the Bylaws would be in conflict with the CC&Rs and the amendment would likely not withstand a legal challenge.

Third, what criteria in a background and credit check would prevent a sale from happening (or has anyone even given that some thought)?

Fourth: For the sake of minimizing the flack from the membership, I would encourage you to seek a legal opinion on:
a) can the Association require such a requirement?
b) what basis could be used with the results to prohibit a sale ?
c) What document does such a requirement belong in to withstand legal challenges?
d) what potential liability is there if the Association gains this authority if they deny a sale or if they approve a sale and the owner turns out to conduct criminal activity?

Most of the info I can find seems to be out of FL.

See Subject: HOA requires new buyers have background check thread on this forum

Can You Screen and Reject Potential Owners? Florida County Says Yes, But Say Why

Florida HOA Background Check This is from a company that does checks. I include it because the have mention the following:

Once the association has decided to screen, they should make sure decisions are made in an objective, systematic manner. Whoever is charged with the decision making should have very specific, written guidelines for the background check information which would disqualify a candidate.

I thank all who took the time to reply. I did find this in the CC&R's.

MEMBERSHIP

Each Owner shall be a Member of the Club. All persons purchasing property subject to this Declaration, by the acceptance of their deeds, agrees to and do thereby become Members of the Club; provided, however, the foregoing is not intended to include persons or entities who hold an interest merely as security for the performance of an obligation or trustees under any instrument securing such an obligation. Membership shall be appurtenant to and may not be separated from ownership of any Holiday Site. Ownership of such Holiday Site, or an undivided interest therein, shall be the sole qualification for membership after delivery of the deed thereto. Class 4 membership and the privileges thereof may be extended to persons who are not Owners as may be provided by the By-laws.

This would appear to mean no background or credit checks. A deed is all that is required in order to become a member.

Thanks,
Wayne

Richard, I thank you for your input.

What you write can have serious ramifications to those of us who have quitclaim, and or deeds
of gift.

We have been acting under this Article for the past 30 years.

Wayne